E-books going mainstream? Getting “Napsterized?” and “Advantage Google”

Really eye-opening (to me, anyway) article in the Sunday Business section of today’s New York Times:

DIGITAL DOMAIN
Will Books Be Napsterized?
By RANDALL STROSS
As the hardware for electronic books moves closer to the
mainstream, publishers wonder whether their industry can be
spared the potential problems of piracy.
http://www.nytimes.com/2009/10/04/business/04digi.html?th&emc=th

From the story:

Free file-sharing of e-books will most likely come to be associated with RapidShare, a file-hosting company based in Switzerland. It says its customers have uploaded onto its servers more than 10 petabytes of files — that’s more than 10 million gigabytes — and can handle up to three million users simultaneously. Anyone can upload, and anyone can download; for light users, the service is free. RapidShare does not list the files — a user must know the impossible-to-guess U.R.L. in order to download one.

This has significance, according to Mr. Stross, because e-books are going mainstream:

. . . E-book hardware is on the verge of going mainstream. More dedicated e-readers are coming, with ever larger screens. So, too, are computer tablets that can serve as giant e-readers, and hardware that will not be very hard at all: a thin display flexible enough to roll up into a tube.

And be sure to read Harvard Berkman Center for Internet and Society fellow Lewis Hyde’s essay in the New York Times Book Review today, “Advantage Google.”

Nothing in the history of copyright permits the treatment of ‘orphan’ works spelled out in the proposed settlement.

The Google Book Search Settlement: A New Orphan-Works Monopoly?

“The Google Book Search Settlement: A New Orphan-Works Monopoly?”

U of Chicago Law & Economics, Olin Working Paper No. 462

RANDAL C. PICKER, University of Chicago – Law School

This paper considers the proposed settlement agreement between Google and the Authors Guild relating to Google Book Search. Google boldly launched Google Book Search in pursuing its goal of organizing the world’s information. Even though Google was sensitive to copyright values, the service relied on mass copying and thus Google undertook a substantial legal risk in setting up the service. That risk was realized with the lawsuits by the Authors Guild and the Association of American Publishers. The October, 2008 settlement agreement for those suits will create an important new copyright collective and will legitimate broad-scale online access to United States books registered before early January, 2009.

The settlement agreement is exceeding complex but I have focused on three issues that raise antitrust and competition policy concerns. First, the agreement calls for Google to act as agent for rights holders in setting the price of online access to consumers. Google is tasked with developing a pricing algorithm that will maximize revenues for each of those works. Direct competition among rights holders would push prices towards some measure of costs and would not be designed to maximize revenues. As I think that that level of direct coordination of prices is unlikely to mimic what would result in competition, I have real doubts about whether the consumer access pricing provision would survive a challenge under Section 1 of the Sherman Act.

Second, and much more centrally to the settlement agreement, the opt out class action will make it possible for Google to include orphan works in its book search service. Orphan works are works as to which the rightsholder can?t be identified or found. That means that a firm like Google can?t contract with an orphan holder directly to include his or her work in the service and that would result in large numbers of missing works. The opt out mechanism – which shifts the default from copyright?s usual out to the class action?s in – brings these works into the settlement.

But the settlement agreement also creates market power through this mechanism. Absent the lawsuit and the settlement, active rights holders could contract directly with Google, but it is hard to get large-scale contracting to take place and there is, again, no way to contract with orphan holders. The opt out class action then is the vehicle for large-scale collective action by active rights holders. Active rights holders have little incentive to compete with themselves by granting multiple licenses of their works or of the orphan works. Plus under the terms of the settlement agreement, active rights holders benefit directly from the revenues attributable to orphan works used in GBS.

We can mitigate the market power that will otherwise arise through the settlement by expanding the number of rights licenses available under the settlement agreement. Qualified firms should have the power to embrace the going-forward provisions of the settlement agreement. We typically find it hard to control prices directly and instead look to foster competition to control prices. Non-profits are unlikely to match up well with the overall terms of the settlement agreement, which is a share-the-revenues deal. But we should take the additional step of unbundling the orphan works deal from the overall settlement agreement and create a separate license to use those works. All of that will undoubtedly add more complexity to what is already a large piece of work, and it may make sense to push out the new licenses to the future. That would mean ensuring now that the court retains jurisdiction to do that and/or giving the new Registry created in the settlement the power to do this sort of licensing.

Third, there is a risk that approval by the court of the settlement could cause antitrust immunities to attach to the arrangements created by the settlement agreement. As it is highly unlikely that the fairness hearing will undertake a meaningful antitrust analysis of those arrangements, if the district court approves the settlement, the court should include a clause – call this a no Noerr clause – in the order approving the settlement providing that no antitrust immunities attach from the court’s approval.

 

Source:  LSN Intellectual Property Law Vol. 2 No. 51,  05/07/2009

The History of CALR, Part 1: More on Thomson West and FLITE Takes Flight

THE HISTORY OF COMPUTER-ASSISTED LEGAL RESEARCH (CALR)

______________________________________________________

First in an occasional series

More on Thomson West Merger and FLITE Takes Flight

********************

This is the first in an occasional and somewhat random look back at the early days of computer-assisted legal research (CALR).  It stems from a post here earlier in the week about a terrific new book by noted antitrust lawyer (and Stanford Law School alumnus) Gary L. Reback, Free the Market!: Why Only Government Can Keep the Marketplace Competitive (catalog record copied below). The very readable book gives an insider look at the merger (Mr. Reback represented LexisNexis) and as Jonathan Zittrain notes on the jacket, “Gary Reback offers a powerful defense for government’s role in protecting market competition. He draws from rich historical examples and his own extraordinary personal vantage point: his victories and defeats at the front lines of the most high-profile antitrust cases of the past two decades.”

Thomson West Merger

In 1997, Mr. Reback took a vacation to Hawaii after he had “spent a year of futility . . . trying to convince the Justice Department to block an anticompetitive merger that would raise the price of hiring a lawyer for just about every consumer of legal services anywhere in America.”

Storytelling for Lawyers and Monopolizing the Law

Chapters 14 (“Storytelling for Lawyers”) and 15 (“Monopolizing the Law”) tell the story of the 1996 merger of Thomson and West, “. . . the largest publishers of court opinions, treatises, and other materials used to do legal research. No other company was even close in terms of market share or customer usage.” And, as an earlier post here suggests, the end result of this merger created a wrecking ball for academic law library budgets. In my opinion absurd and obscene annual price increases was indeed an effect of this merger.

These two chapters trace through some of the very interesting history of legal publishing, electronic and otherwise, from the 1870s to present.

At one point in chapter 15 Mr. Reback states “. . . both Thomson and LexisNexis started charging law schools for online legal research, originally provided free of charge.” I shared this information on the law library directors listserv.

A few directors contested that statement and commented that, to their knowledge, neither Lexis nor Westlaw was ever free; a couple of other directors weren’t so sure and thought that perhaps there were some free installations.  But this comment also elicited a small flood of memories and reminiscences from directors about the very early days of CALR.

Stanford Law Library’s First CALR Terminal (Lexis only)

I myself came to stanford in 1982.  At the time the library had one Lexis terminal, and no Westlaw terminal.  The terminal was the so-called “DeLuxe” terminal, which was a large sit-down consol, reminiscent of the “con” of an early Star Trek starship.  It was located in a room shared with our photocopiers and microforms, both of which were used far more than the Lexis terminal.  For one thing, there was a daily blackout period and we could not access the database between the hours of 11:00 a.m. and 2:00 p.m. There was no downloading of documents, and printing was done laboriously, one screen shot at a time.  Connection was via an internal modem and a phone line paid for, I think, by Lexis.

Dick Danner, from the Duke Law Library noted on the listserv that “the early history of Lexis from an insider’s perspective, with a bit about Westlaw, can be found in: William G. Harrington, ‘A Brief History of Computer-Assisted Legal Research,’ 77 Law Library Journal 543 (1984-85).”

The Air Force Starts Digitizing the Law – FLITE (Federal Legal Information Through Electronics) Database

And then J. Denny Haythorn, Associate Dean of Library and Information Services & Professor of Law at Whittier College School of Law shared this very interesting story about FLITE (reproduced with permission):

In the Law Library Journal article the author refers to the system the Air Force had developed by the late 1960s. The Air Force system was called Federal Legal Information Through Electronics (FLITE) and was operated from the basement of the Air Force finance center in Denver at Lowery Air Force Base.  FLITE had a large staff inputting federal court reports, administrative court reports (e.g., Comp Gen, Board of Contracts Appeals, etc.), US Code sections, CFR sections, and military regulations into databases. There was a staff of research attorneys who received calls from government lawyers for research and they would help formulate searches in the database.  The Finance Center did not use their computer mainframe at night so the searcher would run overnight and be printed.  The research attorneys would call back with the results the next day and sometimes mail the printouts to the requesting attorney.

More powerful minicomputers and the internet simplified the search process to ultimately be more like the commercial services thought FLITE kept the research attorneys for assistance with searches.  The office also continues to maintain unique databases of information use by military lawyers.  FLITE purchased the first PC computers for Air Force legal offices and began a program of law office automation using shareware software (PC Write for example), commercial software, and software specifically written by the office.

FLITE also was an early adopter of CD and DVD technology.  The goal was to have Judge Advocate General attorneys in the field with legal resources for a standalone law office.

The office still exists and is now located with the Air Force Judge Advocate School at Maxwell Air Force Base, in Montgomery, Alabama.  In the 1980s I was one of the research attorneys as they made the transition from batch, overnight searching to real time searches and then user searching directly on the internet.  I also worked on the manuals for some of the software.

Denny will be contibuting more about his experiences as a CALR pioneer, so please stay tuned for later installments of this series.

And here’s the catalog record for Free the Market!

Author: Reback, Gary L., Stanford Law School graduate, J.D.(1974)
Title: Free the market! : why only government can keep the marketplace competitive / Gary L. Reback.
Related e-resource: Publisher description
http://www.loc.gov/catdir/enhancements/fy0906/200804668
Imprint: New York : Portfolio, 2009.
Physical Description: x, 416 p. ; 24 cm.
Note: Signed by the author. CSt-Law
9-d.html

Note: Includes bibliographical references (p. [397]-403) and index.

Contents: Protecting competition — Product distribution –Patent and coypright limitations on competition —
Monopolies and market exclusion — Mergers and acquisitions.Subject (LC): Trade regulation–United States.
Subject (LC): Competition–United States.
ISBN: 9781591842460
ISBN: 1591842468

CALL NUMBER
HD3616 .U47 R136 2009

Monopolizing the Law

From a fascinating, must-read brand new book by noted antitrust lawyer Gary Reback, Free the Market: Why Only Government Can Keep the Marketplace Competitive.

Free the Market: Why Only Government Can Keep the Marketplace Competitive
By Gary L. Reback
Portfolio Books, 2009
*****
Chapters 14, “Storytelling for Lawyers.” and 15, “Monopolizing the Law,” clearly explain how LexisNexis and Westlaw became the market forces that they are today.
From chapter 15:
. . . The West-Thomson merger had precisely the effect that everyone, other than Thomson, the Justice Department, and the judge predicted it would.  Prices for print publications soared.  Thomson started putting fewer pages into each West volume of court cases and charging more for the books.  Price increases for West publications following the takeover exceeded both the rate of inflation and the rate of increases for prices in legal publishing more generally.  One study documented a price increase of over 70 percent for “value added” legal publications (books with supplements) in the four years following the merger.
Prices for online research also climbed astronomically.  Thomson raises rates to private firms each year.  In each of the recent years, Thomson’s charges for online legal research in the West databases have increased roughly 7 percent.  To search the comprehensive West database for state and federal decisions now costs more than $17 per minute.  The federal minimum wage, by constrast, is about $7 an hour.  In addition both Thomson and LexisNexis started charging law schools for online legal research, orginally provided free of charge.  Last year the annual rate increase to law school librarians was roughly 7%, breaking the budget of many university law libraries.